Some of the technology sectorâs big 2023 winners have continued their ascents into this year, but not shares of Apple Inc. Shares of the iPhone maker were down 3% in Monday trading and theyâre off about 10% to start 2024.
But an Evercore ISI analyst sees âa host of tailwinds stacking up in [Appleâs] favor,â even as the consumer-electronics giant has lost some of its shine on Wall Street in the wake of a disappointing March-quarter outlook that implied revenue would decline.
âWhile we understand the disappointment around [the March-quarter guidance] we think iPhone units are largely flat excluding some [one-time] dynamics,â Evercoreâs Amit Daryanani wrote in a note to clients.
Additionally, Appleâs
AAPL,
margin story looks well intact. The company âcontinues to see gross margins work higherâ and expects March-quarter margins to lie in the 46% to 47% range, whereas analysts had been modeling 45.5% gross margins. That sort of talk âis clearly dampening the impact of revenue miss to the bottom lineâ for the March quarter, according to Daryanani.
See also: EUâs record Apple antitrust fine is just the start of a Big Tech regulatory crackdown this year
Furthermore, heâs excited about some Apple developments on the horizon. In his view, commentary around the companyâs recently launched Vision Pro headset â which starts at $3,499 â has been âincrementally better,â and interest among enterprises has been âsizable.â
Appleâs management has also teased that it will make an announcement on generative artificial intelligence later this year, which could be another catalyst. Apple has been less vocal about AI than other large technology companies, potentially to the detriment of its stock as Wall Street gets swept up in AI fervor.
Read: Apple just did something unusual. Can it help the stock amid growth woes?
While Daryanani late Friday removed his tactical outperform call on Appleâs stock that had been linked to its most recent earnings report, he kept his regular outperform rating on the stock and his $220 target price. Among other momentum drivers for the stock could be Appleâs âsustainedâ free-cash-flow generation and a boost to the companyâs capital-allocation program, he said.
Apple typically updates its buyback and dividend programs alongside its March-quarter earnings report.
Shares of Apple were moving lower in Mondayâs session, however, after the European Union levied a nearly $2 billion fine on the company, saying that Apple unjustly showed preference for its own music-streaming service over rival offerings.
